SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
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FORM 10-Q
[X] QUARTERLY REPORT UNDER SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly Period Ended April 30, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______________ to ______________
Commission File Number 0-16999
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Urban Outfitters, Inc.
(Exact name of registrant as specified in its charter)
PENNSYLVANIA 23-2003332
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation of Organization) Identification No.)
1809 Walnut Street, Philadelphia, PA 19103
(Address of principal executive office) (Zip Code)
(215) 564-2313
(Registrant's telephone number including area code)
N/A
(Former name, former address and former fiscal year,
if changed since last report)
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Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
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Title of Each Class Number of Shares Outstanding
of Common Stock at June 1, 1998
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Common Shares, par value, $.0001 per share 17,777,954

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INDEX
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PAGE
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PART I Financial Information

ITEM 1 Financial Statements
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Consolidated Balance Sheets at April 30, 1998 2
(Unaudited) and January 31, 1998
Consolidated Statements of Income for the three 3
months ended April 30, 1998 and 1997 (Unaudited)
Consolidated Statements of Cash Flows for the 4
three months ended April 30, 1998 and 1997 (Unaudited)
Notes to Consolidated Financial Statements 5

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. For further information, refer to the Consolidated Financial
Statements and footnotes thereto included in the Company's Annual Report on Form
10-K for the fiscal year ended January 31, 1998, filed with the Securities and
Exchange Commission on April 21, 1998.
2. Marketable Securities
Marketable securities are classified as follows:
April 30, 1998 January 31, 1998
Current portion
Held-to-maturity .......... $10,922 $ 8,590
Available-for-sale ........ 1,672 2,275
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12,594 10,865
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Noncurrent portion
Held-to-maturity .......... 11,466 11,993
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Total marketable securities... $24,060 $22,858
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PART I
FINANCIAL INFORMATION (continued)

ITEM 2 Management's Discussion and Analysis of Financial Condition
- ------ and Results of Operations
GENERAL
This Securities and Exchange Commission filing is being made pursuant to the
"safe harbor" provisions of the Private Securities Litigation Reform Act of
1995. Certain matters contained in this filing may constitute forward-looking
statements. Any one, or all, of the following factors could cause actual
financial results to differ materially from those financial results mentioned in
the forward-looking statements: industry competition factors, unavailability of
suitable retail space for expansion, difficulty in predicting and responding to
fashion trend shifts, seasonal fluctuations in gross sales, the departure of one
or more key senior managers and other risks identified in filings with the
Securities and Exchange Commission.
The six percent sales increase in this year's first quarter over last year's was
primarily a net result of four factors:
o Urban Retail and Anthropologie stores' comparable sales growth of 9%
o Urban Retail and Anthropologie had five stores opened in the first
quarter of this year that were not opened in the first quarter of last
year
o the new Anthropologie catalog added $417,000 in additional sales during the
quarter
o the Wholesale company recorded a 36% contraction in first quarter sales when
compared to the first quarter of last year
As explained later in more detail, these same four factors had a direct effect
on improved gross profit margins and an increased selling, general and
administrative expense.
The Wholesale company is expected to finish the year at a lower sales level than
the prior year. However, if the new stores open as planned and the planned
comparable store sales are reached, the negative earning effect of the Wholesale
company sales reduction and the new companies (Anthropologie catalog and Urban
Outfitters, UK Ltd.) will be offset by the earnings growth in Urban Retail and
Anthropologie and thereby providing positive earnings growth for the year.
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RESULTS OF OPERATIONS
The Company's operating years end on January 31, and include 12 periods ending
on the last day of the month. For example, FY'99 will end on January 31, 1999.
This discussion of results of operations covers the first quarter of FY'99 and
FY'98.
The following table sets forth, for the periods indicated, the percentage of the
Company's net sales represented by certain income statement data. The following
discussion should be read in conjunction with the table that follows:
THREE MONTHS ENDED
April 30, 1998 April 30, 1997
Net sales 100.0% 100.0%
Cost of goods sold 47.8% 50.0%
Gross profit 52.2% 50.0%
Selling, general and
administrative expenses 44.2% 39.7%
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Income from operations 8.0% 10.3%
Net interest & other (income) (1.0%) (.8%)
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Income before income taxes 9.0% 11.1%
Income tax expense 3.7% 4.6%
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Net income 5.3% 6.5%
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FIRST QUARTER ENDED APRIL 30, 1998, COMPARED
TO THE FIRST QUARTER ENDED APRIL 30, 1997
Net sales increased during the first quarter ended April 30, 1998 to $39.4
million, up 5.9% from $37.2 million during the same period of the prior year.
The net sales increase included a comparable store sales increase of 9.1% or
$2.6 million, an increase of new and enlarged store sales of $2.2 million,
$417,000 from the new Anthropologie catalog, all partially offset by a $3.0
million reduction in Wholesale revenues. The reasons for the comparable store
sales increases, the new and enlarged store sales increases and the catalog
sales are the acceptance of the products offered by the customers. The causes
for the reduction in Wholesale revenues are varied, but the Company believes the
primary reason is that a number of larger customers opted to produce their own
private label merchandise rather than purchase branded products from the
Wholesale company. This trend is continuing and is expected to result in a net
12% to 18% drop in Wholesale revenues for the year. If the drop in revenues is
as expected, the Wholesale company's earnings effect will not be material to the
planned consolidated earnings.
The gross profit margin during the first quarter ended April 30, 1998 was $20.6
million, up $2.0 million or 11.0% from the prior year first quarter of $18.6
million. The dollar increase resulted from the volume increases previously
discussed and improved gross profit margin percentages.
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The gross profit margin percentage improvement of 2.2 percentage points is a
result of a sales mix in this year's first quarter favoring the higher gross
profit margin retail companies. Additionally, the retail companies experienced
higher comparable store sales, higher inventory turnover, and as a result, lower
markdowns.
Selling, general and administrative expenses during the first quarter ended
April 30, 1998 were $17.4 million, up $2.6 million or 17.9% from the prior year
of $14.8 million. The dollar increases were from the following areas:
o operating expenses of new stores opened in Urban Retail and Anthropologie
o investments in the European subsidiary and in the Anthropologie catalog with
no first quarter sales in Europe or minimal sales in the catalog test. The
combined total of these two expenses was approximately $1.2 million
o The Wholesale company incurred slightly less in selling, general and
administrative expense dollars during first quarter when compared to
the prior year
The increase of 4.5 percentage points in selling, general and administrative
expenses is a result of the following factors:
o the $1.2 million in expenses from the two new companies with little or no
sales
o the Wholesale company, while spending less dollars, had a much more
significant drop in revenues (36%). These combinations drove the percent to
sales up
o conversely, the retail companies, due to higher sales in both existing and
new stores, leveraged expenses and drove the percent to sales down
Income from operations during the first quarter ended April 30, 1998 was $3.2
million, down $.6 million (17.7%) from the prior year first quarter of $3.8
million.
The effective income tax rate for the quarter was 41.0%, down from 41.5% last
year. The reduction is a result of a lower average state income tax rate.
Net income during the first quarter ended April 30, 1998 was $2.1 million, down
$325,000 (13.4%) from the prior year of $2.4 million. Increased sales volumes
and improved gross profit margin percentages were offset by operating expense
dollars and percentages leading to the slight decline.
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LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents decreased to $23.9 million at April 30, 1998 from
$26.7 million at January 31, 1998. The $2.8 million decrease in cash and cash
equivalents comes from the net of cash from operations of $3.2 million, capital
expenditures of $(5.9) million, the net purchase of investments of $(1.2)
million and the issuance of common shares on options exercised and the tax
benefit of those options of $1.1 million.
The Company's net working capital decreased from $52.1 million at January 31,
1998, to $50.0 million at April 30, 1998. The $2.1 million decrease in net
working capital was primarily due to investments in property, equipment and
other assets offset by earnings and options exercised.
The Company has a $16.5 million revolving line of credit available to facilitate
letter of credit transactions and cash advances. Interest on any outstanding
cash advance balance is payable monthly and is based on an as offered basis not
to exceed the London Interbank Offered Rate (LIBOR) plus 3/8 of 1%. No cash
borrowing has ever taken place on this line and, accordingly, no principal
amounts were outstanding at January 31, 1998, or April 30, 1998. Outstanding
letters of credit totaled $4.7 million and $6.1 million at January 31, 1998, and
April 30, 1998, respectively. These letters of credit, which have terms from one
month to one year, collateralize the Company's obligation to third parties for
the purchase of inventory. The fair value of these letters of credit is
estimated to be the same as the contract values. There were no loan balances of
any kind at January 31, 1998 or April 30, 1998.
The Company expects that capital expenditures during FY'99 will be approximately
$15.0 million depending upon the number of stores opened, enlarged or improved
during the year. The Company believes that existing cash and investments at
April 30, 1998, as well as cash from future operations, will be sufficient to
meet the Company's cash needs through at least FY'99, FY'00 and FY'01.